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Home› UPSC CSE› Prelims GS Paper I› 2016 questions› Question 5

UPSC CSE Prelims

Subject: Current Affairs Chapter: External Sector & Foreign Trade

2016 PYQ

Question 5

Which of the following best describes the term 'import cover', sometimes seen in the news?

Choose one answer AIt is the ratio of value of imports to the Gross Domestic Product of a country BIt is the total value of imports of a country in a year CIt is the ratio between the value of exports and that of imports between two countries DIt is the number of months of imports that could be paid for by a country's international reserves

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Correct answer: D

Correct Option: D Explanation: Import cover indicates how long a country could finance imports using its foreign-exchange reserves at the prevailing import rate. Option-wise Analysis: A: Incorrect - Imports/GDP measures trade intensity, not reserve adequacy. B: Incorrect - A year’s import bill is a flow amount, not months of reserve coverage. C: Incorrect - An export-to-import ratio compares trade flows, not international reserves. D: Correct - Correct-the indicator is usually expressed as months of prospective imports covered by reserves.

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